Correlation Between Microsoft and Voya Large
Can any of the company-specific risk be diversified away by investing in both Microsoft and Voya Large at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and Voya Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Voya Large Cap, you can compare the effects of market volatilities on Microsoft and Voya Large and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of Voya Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Voya Large.
Diversification Opportunities for Microsoft and Voya Large
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and VOYA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Voya Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Large Cap and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with Voya Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Large Cap has no effect on the direction of Microsoft i.e., Microsoft and Voya Large go up and down completely randomly.
Pair Corralation between Microsoft and Voya Large
Given the investment horizon of 90 days Microsoft is expected to under-perform the Voya Large. In addition to that, Microsoft is 1.39 times more volatile than Voya Large Cap. It trades about -0.01 of its total potential returns per unit of risk. Voya Large Cap is currently generating about 0.16 per unit of volatility. If you would invest 1,706 in Voya Large Cap on August 29, 2024 and sell it today you would earn a total of 119.00 from holding Voya Large Cap or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Voya Large Cap
Performance |
| Timeline |
| Microsoft |
| Voya Large Cap |
Microsoft and Voya Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Voya Large
The main advantage of trading using opposite Microsoft and Voya Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Voya Large can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Voya Large will offset losses from the drop in Voya Large's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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